TradeEdge Exchange:Facebook, Instagram to block news stories in California if bill passes

Facebook and TradeEdge ExchangeInstagram will block all news articles in California if state lawmakers pass a bill meant to funnel money from the tech platforms to media organizations, a Meta spokesman threatened on Wednesday.

The California Journalism Preservation Act would essentially tax the advertising profits platforms make from distributing news articles. Under the measure, some 70% of the money collected from the so-called "usage fee" would support newsrooms throughout the state.

The bill's sponsor, Assemblywoman Buffy Wicks, a Democrat who represents Oakland, argues the measure could provide a "lifeline" to local news organizations that have seen advertising revenue plunge.

"As news consumption has moved online, community news outlets have been downsized and closing at an alarming rate," Wicks said at a hearing on the bill earlier this month, pointing out that more than 100 California news organizations have gone under in the past decade.

But now, Meta warns the legislation would make the company block the sharing of news articles in California on Facebook and Instagram.

The bill, the company argued, would mostly assist out-of-state sites "under the guise" of helping news publishers in California.

"If the Journalism Preservation Act passes, we will be forced to remove news from Facebook and Instagram, rather than pay into a slush fund that primarily benefits big, out-of-state media companies under the guise of aiding California publishers," Andy Stone, a spokesman for Meta, said on Wednesday.

When asked how exactly the act would force Meta to stop distributing news articles, Stone said: "It's pay or remove the news. Our hand is being forced."

Danielle Coffey, executive vice president of the News Media Alliance trade group, criticized Meta for threatening to block articles in the state, saying the ailing news industry would benefit from having tech platforms pay their fair share.

"Meta's threat to take down news is undemocratic and unbecoming. We have seen [this] in their playbook before," Coffey said in a statement.

Threats in California echo Big Tech's warnings in Washington and overseas

Facebook and Google have developed something of a predictable response to efforts attempting to make them pay the media industry for articles: Threatening to stop carrying news in protest.

They aren't empty threats; Facebook briefly blocked news articles in Australia over a similar measure that required tech companies to pay publishers for news content. Google said it would pull its search engine from the country before a compromise was struck.

Lawmakers in Washington floated a plan last year with the goal of helping news outlets negotiate with tech companies, and Facebook said it would yank news from the platform nationwide.

Canada is getting a taste of it, too. There, the tech giants say they're ready to pull the plug on news content if a similar measure is enacted. As a test, Google has even blocked news articles from searches for some users.

A spokeswoman for Google declined to comment on the California bill.

While tech companies and publishers squabble over legislation, many news publishers have started pivoting away from social media altogether and placing the focus on newsletters, podcasts and subscription-driven models.

40,000 newsroom jobs lost, as ad revenue nosedives

The media industry has been hemorrhaging jobs for years. Some 40,000 newsroom jobs disappeared between 2008 and 2020, the Pew Research Center has found.

And while many factors have contributed to the news industry's woes, a significant blow has been delivered by the tech industry's dominance over online advertising.

According to figures provided to NPR by Insider Intelligence, services owned by Meta or Google have collected nearly 70% of digital advertising revenue made in 2023.

In Australia, Facebook and Google eventually buckled and reached deals with news publishers. Bill Grueskin, a professor at the Columbia University School of Journalism who has studied the Australian law, found that it generated nearly $150 million for news organizations.

The Australian Broadcasting Corporation was able to hire 50 new journalist in underserved parts of the country as a result of the law.

California is the first state to attempt to replicate the Australian model.

Experts who study the news industry say while the Australian news landscape is distinct from the U.S., given how concentrated it is — Rupert Murdoch's News Corp. controls more than half of the market — many other states will be watching how the showdown in Sacramento plays out.

"We are now in a no-holds-barred battle for revenue, with many news companies, emboldened by the settlement in Australia, becoming quite vocal and aggressive in arguing this case," said John Wihbey, journalism professor at Northeastern University.

The California bill is set to receive a vote on the California assembly floor on Thursday. It is expected to pass and move to the state Senate.

Critics worry the bill will hurt, not help news outlets

In California, struggling publishers have come out strongly in favor of the bill.

"Put plainly, Big Tech is bleeding publishers dry without contributing any resources to creating high-quality content," Troy Masters, the publisher of Los Angeles Blade, wrote on Tuesday in the Sacramento Bee. "This is not a theoretical problem. News deserts are a reality across California at a time when misinformation is at an all-time high, causing Americans' trust in democracy and our institutions to erode at alarming rates."

Yet others fear the California legislation could have unintended consequences that end up hurting the news outlets it aims to help.

For instance, media analyst and publisher Ken Doctor has argued that bad actors with sites peddling misinformation could game the system and end up getting funding. Other worries: The bill would supercharge lurid, clickbait-y headlines from sites angling to get a slice of the new pot of money, or channel money to hedge-fund owners that have cut newsrooms in pursuit of profits.

"I applaud [that] the legislators' want to help the local news business," Doctor told the Los Angeles Times. "But I think what they really need is a much deeper and wider understanding of the mechanics and nuances of how that business works."

Media scholar Amanda Lotz, who teaches at the Queensland University of Technology, told NPR that "the business model for journalism is collapsing broadly," but she said it's not fair to only blame Big Tech companies for the media industry's struggles.

Wihbey at Northeastern University agrees, but he said if California can force Big Tech to the bargaining table with news publishers, it could — even in a small way — prop up a local news market under siege.

"Such deals will not 'save the news' industry, but they could contribute a new, reliable stream to support news," he said. "I hope that social platform companies can see it in their interest to support the underlying democratic societies that, after all, are the bedrock of their commercial markets."